Allied Against ORC
Organized retail crime has never been as prevalent as it is today.
NRF’s eighth annual survey tracking how retailers are affected by organized retail crime (ORC) reports that 96 percent say they have been victims of ORC — the methodical stealing of vast quantities of merchandise — in the past 12 months.
Nearly 70 percent of respondents reported that ORC activity has increased overall, and 88 percent said it has been increasing for the past three years.
The report describes ORC ring members as “clever,” using designated roles and hand signals, cell phones, GPS devices, comprehensive shopping lists and such “tools of the trade” as foil-lined shopping bags, purses, boxes and signal jammers to defeat inventory control tags.
Some gangs use computers to generate fake receipts for the purpose of making cash returns, while others use fake credit cards or checks to purchase gift cards or merchandise. In some cases, employees are recruited to provide details about camera or security systems — or to look the other way.
Organized “boosters” — those who do the stealing — can often hit 30 or more stores in a single day. Stolen merchandise is commonly sold through websites and physical fencing locations including flea markets, pawn shops and independently run stores.
Organized retail criminals make a particularly strong profit off fraudulent returns (100 percent of the value of the retail merchandise, plus tax). And as the NRF report notes, they also steal merchandise from trailers and distribution centers.
It appears that ORC incidents are also becoming more dangerous: The number of ORC incidents in which violence occurred rose from 13 to 15 percent in the most recent survey.
“It’s an alarming number,” says Joe LaRocca, senior asset protection advisor to NRF. “Stores are simply trying to sell merchandise and conduct business in a safe and crime-free environment, and ORC is contributing to the larger community safety concerns that exist.”
David M. Williams, assistant state’s attorney for Cook County, Ill., says there frequently are connections between people who steal in an organized fashion from retailers and those who traffic in narcotics, identity theft, public aid fraud and money laundering. Some are suspected of having links to international terrorism.
Jason Moulton, loss prevention director for Safeway’s Seattle division, says he is “seeing more violence coming from ORC thieves. During the apprehension they fight, punch, and sometimes produce guns and knives. We have had LP agents and employees injured by ORC vehicles during their getaways.”
Lower staffing levels at stores and the current recessionary economy account for some of the growth in ORC activity, but LaRocca notes ORC criminals are “all about the money. Criminals consider it high reward and low risk.”
While rates of ORC incidents are on the rise, their growing visibility may ultimately be their undoing.
“Higher shrink numbers and increased activity with organized retail crime are bringing the problem to the forefront,” LaRocca says. “That’s why a number of companies now are starting to work together to address the problems in their geographic areas.
This sharing of information “has had great results,” he says. “A large and growing number of cases have been made around the country because retailers and law enforcement were sharing and linking information, resulting in much larger and stronger cases.”
Safeway Seattle recently participated in a case that illustrates how lucrative ORC can be; it also illustrates how the leaders of organized retail gangs can be caught, stopped and convicted through the collaborative efforts of retailers, law enforcement agents and prosecutors.
A couple in the Seattle area operated as fences for a year and a half, buying stolen goods from more than 30 boosters. The boosters shoplifted general merchandise from multiple retailers in the greater Seattle area, including Safeway stores.
Moulton says the fences provided a catalog of pictures of the products they wanted, and often drove the boosters to the targeted stores. Boosters were paid 12 to 25 percent of the value of each item they brought in; the fences sold those items for roughly 50 percent of their value. They also smuggled some of the loot to Cambodia concealed in shipping containers.
Before the ring was busted, the estimated retail value of the stolen goods totaled $4.8 million, including $1.2 million from Safeway alone. The fences are now serving time in state prison and awaiting deportation, Moulton says.
Because ORC can overlap into so many areas of criminal activity and often takes place across multiple jurisdictions, it takes “a long time to investigate ORC and it takes a lot of resources,” William says. “So to combine the resources of law enforcement and the private sector to be able to work these cases and share information and expertise is very important.”
For companies to have “Just one person dedicated to ORC [isn’t] enough,” Moulton says. “We have to cooperate with our competitors and work together. That increases your chances of having successful investigations and prosecutions.”
LaRocca says that formalized ORC cooperation between retailers, community leaders and law enforcement officials emerged in 2004 when Target, in conjunction with police and community leaders in St. Paul, Minn., launched the first “Safe City” crime-reduction partnership.
These days, “a new partnership comes into existence almost every month,” says NRF vice president of loss prevention Richard Mellor. “We hear of a small one becoming mid-sized, then it becomes very big. There is no competition among retailers when you are talking about criminals.”
The Cook County Regional Organized Retail Crime Task Force (CCROC), which Williams helped form, had 10 retail members when it was created in December 2010. Today it has more than 1,000 members and is linked to similar ORC partnership associations in Ohio and Indiana, creating a multi-state ORC prevention/capture unit.
“We’ve had numerous successes in investigations and prosecutions that we wouldn’t have had without the task force,” says Williams. “By sharing information, you can pretty quickly turn what first looked like a $4,000 retail crime case into a $100,000 case.”
Safeway’s Seattle division participates in the Washington State Organized Retail Crimes Alliance (WSORCA). It has more than 800 participants, and Moulton says members use WSORCA “to identify the bigger fish, to combine and link cases together, giving prosecutors the ability to charge in one court in one county on a statewide basis.”
Not only do the partners in such associations gain leverage by working with local law enforcement agencies, they also gain depth and strength by working with national law enforcement agencies like the Secret Service.
Moulton says that he has recently been contacted by federal agencies looking for information relating to ORC. “I’m hopeful this will result in investigation and prosecution at the federal level, as all of these crimes impact interstate commerce,” he says.
To decisively rout ORC, “we need more law enforcement and loss prevention agents dedicated to ORC, working together on long-term investigations,” Williams says. “And we need to continue to educate law enforcement, retailers, prosecutors and judges on the extent of these crimes.”
ORC “doesn’t just hurt retailers,” he says, it “also victimizes state budgets with its related loss of tax revenues — dollars that should be spent on policemen, firemen, hospitals. It victimizes the communities through all the security issues that come up, and it victimizes the country because of the national security threats that we suspect some of the stolen money supports.
“So when you look at the extent of the crime, you can easily see why it should not be ignored.”